As the gap between pension fund assets and liabilities increases, a growing number of sponsors are looking to reduce their exposure to expensive defined benefit schemes and hand over management to an insurer through a buy-out.

The UK buy-out market hit a record £8bn (€9bn, $11bn) last year compared to less than £3bn in 2007, according to a recent report by Aon, risk management consultants. Among the transactions last year was the first £1bn deal – struck by Prudential to insure pensioner liabilities for Cable & Wireless, followed by a similar size buy-out of Thorn’s pension scheme by Pension Insurance Corporation.